Expectations pp 109-120 | Cite as

Expectations in Tobin’s Macroeconomics: The Fisherian and Keynesian Roots of Tobin’s q and Corridor of Stability

  • Robert W. DimandEmail author
Part of the Springer Studies in the History of Economic Thought book series (SSHET)


In his q theory of investment, in his analysis of money demand and portfolio choice, and in his analysis of macroeconomic instability, James Tobin focused on expectations of returns on assets and on expectations of inflation. His research was informed by his close study of John Maynard Keynes’s Treatise on Money (1930), especially Keynes’s Q theory of investment, and Keynes’s General Theory (1936), especially Chap. 19 on what happens when money wages are flexible, and of Irving Fisher, emphasizing both Fisher’s debt-deflation theory of depressions and his concept of the market value of equity as the net present value of the expected stream of earnings.


  1. Brainard, W. C., & Tobin, J. (1968). Pitfalls in financial model-building. American Economic Review: AEA Papers and Proceedings, 58(2), 99–122.Google Scholar
  2. Bruno, R., & Dimand, R. W. (2009). The corridor of stability in Tobin’s Keynesian model of recession and depression. International Journal of Applied Economics and Econometrics, 17(1), 17–25.Google Scholar
  3. Buiter, W. (2003). James Tobin: An appreciation of his contributions to economics. Economic Journal, 113(491), F585–F631.CrossRefGoogle Scholar
  4. Chadha, B. (1989). Is increased price inflexibility stabilizing? Journal of Money, Credit, and Banking, 21(4), 481–497.CrossRefGoogle Scholar
  5. Colander, D. (1999). MD dialogue: Conversations with James Tobin and Robert Shiller on the ‘Yale tradition’ in macroeconomics. Macroeconomic Dynamics, 3(1), 116–143.CrossRefGoogle Scholar
  6. Crotty, J. (1990). Owner-management conflict and financial theories of investment instability: A critical assessment of Keynes, Minsky, and Tobin. Journal of Post Keynesian Economics, 12(4), 519–542.CrossRefGoogle Scholar
  7. De Long, J. B., & Summers, L. H. (1986). Is increased price flexibility stabilizing? American Economic Review, 76(5), 1031–1044.Google Scholar
  8. Dimand, R. W. (1999). Irving Fisher and the Fisher relation: Setting the record straight. Canadian Journal of Economics, 32(3), 744–750.CrossRefGoogle Scholar
  9. Dimand, R. W. (2004). Minsky and Tobin on the instability of a monetary economy. In M. Lavoie & M. Seccareccia (Eds.), Central banking in the modern world. Cheltenham, UK, and Northampton, MA: Edward Elgar Publishing.Google Scholar
  10. Dimand, R. W. (2014). James Tobin. London, Basingstoke and New York: Palgrave Macmillan.CrossRefGoogle Scholar
  11. Driskill, R. A., & Sheffrin, S. M. (1986). Is price flexibility destabilizing? American Economic Review, 76(4), 802–807.Google Scholar
  12. Fisher, I. (1896) Appreciation and interest (Vol. 1). New York: Macmillan for the American Economic Association; (Reprinted in Fisher (1997)). Google Scholar
  13. Fisher I (1926) A statistical relation between unemployment and price changes. International labour review, 13(6), 785–792, Reprinted in Fisher (1997) Vol. 8, and as “Lost and found: I discovered the Phillips curve. Journal of Political Economy, 81(1973), 496–502.Google Scholar
  14. Fisher I (1928) The money illusion. New York: Adelphi; (Reprinted in Fisher (1997), Vol. 8).Google Scholar
  15. Fisher I (1932) Booms and depressions. New York: Adelphi; (Reprinted in Fisher (1997), Vol. 10).Google Scholar
  16. Fisher I (1933) The debt-deflation theory of great depressions. Econometrica, 1(3), 337–57; (Reprinted in Fisher (1997), Vol. 10).Google Scholar
  17. Fisher I (1997) The Works of Irving Fisher, 14 volumes, edited by William J. Barber assisted by Robert W. Dimand and Kevin Foster, consulting editor James Tobin, London: Pickering & Chatto.Google Scholar
  18. Friedman M (1968) Presidential address: The role of monetary policy. American Economic Review, 58(1), 1–17; (Reprinted in Tobin, ed. (2002)).Google Scholar
  19. Hayashi, F. (1982). Tobin’s marginal q and average q: A neoclassical interpretation. Econometrica, 50, 213–224.CrossRefGoogle Scholar
  20. Hicks J. R. (1935) A suggestion for simplifying the theory of money. Economica new series, 2(1), 1–19, (Reprinted in Tobin, ed. (2002)).Google Scholar
  21. Jüttner, D. J. (1987). The Wicksell-Tobin investment model. Journal of Macroeconomics, 9, 457–462.CrossRefGoogle Scholar
  22. Keynes, J. M. (1930). A treatise on money, 2 volumes. London: Macmillan.Google Scholar
  23. Keynes J. M. (1936) The general theory of employment, interest and money. London: Macmillan.Google Scholar
  24. Keynes J. M. (1937) The general theory of employment. Quarterly Journal of Economics, 51, 209ff. Reprinted in Keynes (1971–89) Vol. XIV, In S. E. Harris (Eds.) (1947), The new economics (pp. 181–93). New York: Knopf.Google Scholar
  25. Keynes J. M (1971–89) The collected writings of John Maynard Keynes, 30 volumes, In D. E. Moggridge & E. A. G. Robinson, volume editors E. S. Johnson and D. E. Moggridge, London: Macmillan, and New York: Cambridge University Press, for the Royal Economic Society.Google Scholar
  26. Lerner, A. P. (1940). The economics of control. New York: Macmillan.Google Scholar
  27. Lucas, R. E., Jr. (1981a). Studies in business cycle theory. Cambridge, MA: Oxford, Basil Blackwell, MIT Press.Google Scholar
  28. Lucas, R. E., Jr. (1981b). Tobin on monetarism: A review article. Journal of Economic Literature, 19(2), 558–567.Google Scholar
  29. Markowitz H (1952) Portfolio selection. Journal of finance, 7(1), 77–91 (Reprinted in Tobin, ed. (2002)).Google Scholar
  30. Markowitz, H. (1959). Portfolio selection. New York: Wiley for the Cowles Foundation for Research. in Economics.Google Scholar
  31. Minsky, H. P. (1975). John Maynard Keynes. New York: Columbia University Press.CrossRefGoogle Scholar
  32. Minsky, H. P. (1981). James Tobin’s Asset accumulation and economic activity: A review article. Eastern Economic Journal, 7(3), 199–209.Google Scholar
  33. Minsky, H. P. (1982). Can “IT” happen again? and other essays on instability and finance. Armonk, NY: M. E. Sharpe.Google Scholar
  34. Minsky, H. P. (1986). Stabilizing an unstable economy. New Haven, CT: Yale University Press for the Twentieth Century Fund.Google Scholar
  35. Mishkin, F. S. (1983). A rational expectations approach to macroeconometrics: Testing policy ineffectiveness and efficient-market models. Chicago: University of Chicago Press.CrossRefGoogle Scholar
  36. Myrdal G (1939) Monetary equilibrium (R. B. Bryce & N. Stolper, Trans.) Glasgow: William Hodge; (Reprinted New York: Augustus M. Kelley, Reprints of Economic Classics, 1965).Google Scholar
  37. Patinkin, D. (1965). Money, interest and prices (2nd ed.). New York: Harper & Row.Google Scholar
  38. Palley, T. I. (2008). Keynesian models of recession and depression revisited. Journal of Economic Behavior & Organization, 68(2), 167–177.CrossRefGoogle Scholar
  39. Rogers, C. (1989). Money, interest and capital. Cambridge, UK: Cambridge University Press.CrossRefGoogle Scholar
  40. Rymes, T. K. (Ed.). (1987). Keynes’s lectures, 1932–35: Notes of students. Ottawa: Department of Economics, Carleton University.Google Scholar
  41. Rymes T. K. ed. (1989) Keynes’s lectures, 1932–35: Notes of a representative student, London and Basingstoke: Macmillan, and Ann Arbor: University of Michigan Press.Google Scholar
  42. Schmidt, K. J. W. (1995). “Tobin’s q? Myrdal’s Q! Ein Fallbeispiel für den Wert von Fremdsprachenkenntnissen” [Tobin’s q? Myrdal’s Q! An Example of the Value of Knowing Foreign Languages]. Kredit und Kapital, 28, 175–200.Google Scholar
  43. Shiller, R. J. (1999). The ET interview: Professor James Tobin. Econometric Theory, 15, 867–900.CrossRefGoogle Scholar
  44. Shiller R. J. (2000) Irrational exuberance (2nd ed.). Princeton, NJ: Princeton University Press (2005).Google Scholar
  45. Shoup, C., Friedman, M., & Mack, R. P. (1943). Taxing to prevent inflation. New York: Columbia University Press.CrossRefGoogle Scholar
  46. Tobin, J. (1941). A note on the money wage problem. Quarterly Journal of Economics, 55, 508–516.CrossRefGoogle Scholar
  47. Tobin, J. (1958). Liquidity preference as behavior towards risk. Review of Economic Studies, 25(1), 65–86.CrossRefGoogle Scholar
  48. Tobin, J. (1959). On the predictive power of consumer intentions and attitudes. Review of Economics and Statistics, 41(1), 1–11.CrossRefGoogle Scholar
  49. Tobin, J. (1969). A general equilibrium approach to monetary theory. Journal of Money, Credit, and Banking, 1(1), 15–29.CrossRefGoogle Scholar
  50. Tobin, J. (1971). Essays in economics (Vol. 1). Amsterdam: North-Holland.Google Scholar
  51. Tobin, J. (1975). A Keynesian model of recession and depression. American Economic Review: AEA Papers and Proceedings, 65(2), 195–202.Google Scholar
  52. Tobin, J., & Brainard, W. C. (1977). Asset markets and the cost of capital. In R. Nelson & B. Balassa (Eds.), Economic progress, private values, and public policy: Essays in honor of William Fellner (pp. 235–262). Amsterdam: North-Holland.Google Scholar
  53. Tobin J (1978) A proposal for international monetary reform. Eastern Economic Journal, 4(3–4), 153–159; Reprinted in Eastern Economic Journal, 29(4), 519–526.Google Scholar
  54. Tobin J (1980a) Asset accumulation and economic activity. Oxford, Chicago: University of Chicago Press, Blackwell.Google Scholar
  55. Tobin, J. (1980b). The overlapping generations model of fiat money: Discussion. In J. H. Kareken & N. Wallace (Eds.), Models of monetary economies. minneapolis, MN: Federal Reserve Bank of Minneapolis.Google Scholar
  56. Tobin, J. (1983). Liquidity preference, separation and asset pricing. Zeitschrift für Betriebswirthschaft, 53(3), 236–238.Google Scholar
  57. Tobin, J. (1984a). On the efficiency of the financial system. Lloyds Bank Review, 153, 1–15.Google Scholar
  58. Tobin, J. (1984b). A mean-variance approach to fundamental valuations. Journal of Portfolio Management, 20, 26–32.CrossRefGoogle Scholar
  59. Tobin, J. (1987a). Irving Fisher. In J. Eatwell, M. Milgate, & P. Newman (Eds.), The new palgrave: A dictionary of economics. London: Palgrave Macmillan.Google Scholar
  60. Tobin, J. (1987b). ‘Microfoundations’ and the impasse in macroeconomics. Mathematical Social Sciences, 14, 195–198.CrossRefGoogle Scholar
  61. Tobin, J. (1989). Review of Stabilizing an unstable economy, by Hyman P. Minsky. Journal of Economic Literature, 27(1), 105–108.Google Scholar
  62. Tobin, J., & Brainard, W. C. (1990). On Crotty’s critique of q theory. Journal of Post Keynesian Economics, 12(4), 543–549.CrossRefGoogle Scholar
  63. Tobin, J. (1992). An old Keynesian counterattacks. Eastern Economic Journal, 18(4), 387–400.Google Scholar
  64. Tobin, J. (1993). Price flexibility and output stability: An old Keynesian view. Journal of Economic Perspectives, 7(1), 45–65.CrossRefGoogle Scholar
  65. Tobin J. (1997) An overview of the general theory. In G. C. Harcourt & P. A. Riach (Eds.), A “Second Edition” of the general theory (Vol. 2, pp. 3–27). London and New York: Routledge.Google Scholar
  66. Tobin, J., & Golub, S. S. (1998). Money, credit, and capital. Boston: Irwin McGraw-Hill.Google Scholar
  67. Tobin, J. (Ed.). (2002). Landmark papers in macroeconomics selected by James Tobin. MA, Cheltenham, UK, Northampton: Edward Elgar Publishing.Google Scholar
  68. Tobin J. (2003) World finance and economic stability: Selected essays of James Tobin, with a foreword by J. Yellen, Cheltenham, UK, and Northampton, MA: Edward Elgar Publishing.Google Scholar
  69. Wicksell K. ([1898] 1936), Interest and prices (R. F. Kahn with introduction by B. Ohlin, Trans.). London: Macmillan.Google Scholar

Copyright information

© Springer Nature Switzerland AG 2020

Authors and Affiliations

  1. 1.Department of EconomicsBrock UniversitySt. CatharinesCanada

Personalised recommendations